Correlation Between Okta and VeriSign

Can any of the company-specific risk be diversified away by investing in both Okta and VeriSign at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Okta and VeriSign into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Okta Inc and VeriSign, you can compare the effects of market volatilities on Okta and VeriSign and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Okta with a short position of VeriSign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and VeriSign.

Diversification Opportunities for Okta and VeriSign

-0.57

Correlation Coefficient

Okta  VeriSign

Excellent diversification

The 3 months correlation between Okta and VeriSign is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and VeriSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VeriSign and Okta is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Okta Inc are associated (or correlated) with VeriSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VeriSign has no effect on the direction of Okta i.e., Okta and VeriSign go up and down completely randomly.

Pair Corralation between Okta and VeriSign

Given the investment horizon of 90 days Okta Inc is expected to under-perform the VeriSign. In addition to that, Okta is 1.67 times more volatile than VeriSign. It trades about -0.36 of its total potential returns per unit of risk. VeriSign is currently generating about -0.04 per unit of volatility. If you would invest  18,719  in VeriSign on January 25, 2024 and sell it today you would lose (164.00) from holding VeriSign or give up 0.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Okta Inc  vs.  VeriSign

Okta Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

VeriSign

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VeriSign has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Okta and VeriSign

The main advantage of trading using opposite Okta and VeriSign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, VeriSign can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in VeriSign will offset losses from the drop in VeriSign's long position.

The idea behind Okta Inc and VeriSign pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.